Chile and Peru appear as high-cost countries on the 2026 Net Cash Cost curve, driven by current geopolitical tensions. However, Cash Costs, ex-royalties, ex-works frame a different story. Labour and fuel productivity still give the region an edge, though unit prices and rising acid costs put future competitiveness in question.
Structural changes in the global economy due to current geopolitical tensions are reaching the copper industry on several fronts simultaneously – the precious metals rally, macro-driven copper price momentum, and rising costs across key drivers – contributing to a paradigm shift. That prompts rethinking how competitiveness is assessed – and where capital is best deployed – with future demand set to outstrip committed production. For more detail on the forecast, see CRU's Copper Long Term Market Outlook.
A principal indicator of asset competitiveness is CRU's Net Cash Cost, excluding royalties. This measure groups direct operating costs at the mine site (Cash Cost, ex-royalties, ex-works), realisation costs (freight, TC/RCs and marketing) and by-product credits. Therefore, it accounts for the asset as a whole – from production through to freight at port – and reflects all revenue streams rather than just copper alone, making it, at first glance, a well-rounded metric for competitiveness analysis.
The Net Cash Cost metric is highly relevant for mining companies, investors and future stakeholders seeking to understand an asset/company/country relative position on the curve, and specifically whether it sits below the – where a higher percentile denotes a less competitive cost position. However, as noted above, recent structural change has complicated that picture – most pertinently, the rally in precious metals.
On 2026 Net Cash Costs, Chile and Peru – Latin America's leading producers – have not benefited to the same extent as jurisdictions with more polymetallic geologies such as Indonesia, Russia and Australia, which now all post negative average Net Cash Costs – with both Chile and Peru approximately book-ending the 3rd quartile based on the latest results from CRU's Copper Mine Asset Platform. That is a clear sign the two countries are struggling to maintain their competitiveness, with their assets unable to capture the momentum in by-product credits, raising questions regarding their long-term industry position.
If we isolate the components of Net Cash Cost and focus only on Cash Costs – a foundational metric in CRU's methodology – a different cost curve emerges for 2026. Chilean and Peruvian assets are far more evenly distributed across this curve, appearing in each of the percentile bands above. At the country level, both now sit below the 50th percentile, a materially more competitive position.
This divergence points to a broader conclusion – the competitiveness of a company or an asset cannot be read from a single metric. It requires all cost components to be examined stage by stage. Therefore, here we examine the critical Cash Cost drivers in Chile and Peru against the global average, and the fundamentals behind the variations.
Average Cash Cost, ex-royalties, ex-works in Chile and Peru have fluctuated sharply in recent years, as geopolitical tensions fed through key cost drivers. Sulphur and sulphuric acid (Chemicals) unit prices rose steeply over 2025, and explosives markets came under pressure too, producing an unsurprising 6% increase in Cash Costs between 2024 and 2025.
The intensification of US-Iran tensions in 2026 has since been felt in both oil prices, via the risk to traffic through the Strait of Hormuz, and sulphur prices – hitting the fuel and chemicals drivers simultaneously. Sulphuric acid faces added pressure from China's restrictions on exports, and our forecast points to a further 8% rise in 2026.
For Chile and Peru specifically, as the waterfall chart above illustrates, excluding consumables – an item that aggregates several drivers but carries little explanatory value in isolation – the 2026 increase is led by labour and fuel. Looking further out, our 2026 Q2 macroeconomic outlook, which assumes the effects of the Middle East conflict unwind by 2027, points to broad-based cost deflation across most inputs, offset in both countries by significant increases in sulphuric acid, where prices are expected to reflect the shock with a one-year lag.
On that basis, we examine these three drivers – labour, fuel and sulphuric acid – in turn. For each, we analyse consumption/productivity, unit prices and cost trends, distinguishing between costs per ton of ore and per ton of copper, and benchmarking both countries against the global average.
Labour
On productivity – measured as worked hours per ton of ore – Chile and Peru both sit below the global average. The global trend has been, and is expected to remain, relatively stable, with variations of less than 5%. By contrast, both South American countries are on an upward trend, pointing to an erosion of competitiveness – though with a 35% gap to the global average, they retain considerable headroom.
That productivity edge does not carry over to unit prices. Hourly labour costs in both countries diverge from the global average, with Peru the more acute case: up 20%, against 10% globally, between 2023 and 2028. Chile's profile is steadier but starts from a higher base. Both are forecast to see marked increases in 2026, driven by minimum wage policy, a trend echoed elsewhere in Latin America, as well as by union negotiations. That raises the question of how long regional prices can remain competitive, particularly against the DRC and China, at $1 and $14 per worked hour, respectively, in 2026.
Translating this into overall costs, the picture depends on the denominator. On a per-ton-of-ore basis, Chile and Peru started the period 6% below the global average, a gap that narrows to 1% by 2028. Movement in both underlying metrics is dragging costs towards the global average, with competitiveness largely eroded by 2028.
On a per-ton-of-copper basis, accounting for Chile and Peru’s relatively low average head grades, the outlook is worse. Both countries hold costs below the global average until 2025. However, from 2026, the increases in worked hours and hourly costs begin to bite. Compounded by stagnating levels of copper production in both countries reversing the advantage in 2025 and opening a 10% gap to the global average by 2028.
Fuel
On consumption, the position is more competitive for the South American powerhouses, with the gap to the global average narrower than for labour productivity. That advantage is likely to be short-lived, as the increase in Chile and Peru is steep enough to close the gap entirely and push unit consumption above the global average by 2028.
On unit prices, expressed per litre, the picture is more challenging, with increases of 20% in both countries in 2026. Local policy measures to ease the impact on miners have been under discussion, but the Middle East shock has already fed through. Plus, even if the conflict eases, prices in Chile and Peru are expected to hold above $1 /litre – ahead of 2025 figures – to 2028 at least.
On costs, the upward trend is clear on a per-ton-of-ore basis, with both countries moving above the global average. Global indicators fall significantly by that point but forecast prices in Peru do not follow them down – Chile does, though from a higher base – and the crossover in consumption compounds the effect. The same pattern holds for a per-ton-of-copper basis, where flat production in both countries against global growth widens the gap considerably: 3% per ton of ore, against 14% per ton of copper.
Sulphuric acid
On consumption, this is the least competitive of the three drivers against the global benchmark, with Chile and Peru sitting some 10% above the average – a gap that holds broadly constant over the period. However, measured against other key SXEW markets, the two countries retain a clear advantage – unit consumption runs at 16 kg acid/t ore, against 40 kg acid/t ore in Africa. Because LATAM countries process considerably more ore, total regional consumption is nonetheless higher, at 8,400 kt in Chile and Peru against 5,100 kt across Africa.
On unit prices, the Middle East conflict has lifted key acid markets sharply, with NW Europe up nearly 30% in 2026. The increase in Chile has been comparatively modest to date, holding close to the pre-conflict forecast. With 40% of consumption imported, an immediate pass-through might have been expected as Chilean spot prices reached $500 /t. However, roughly 80% of requirements sit under fixed contracts negotiated at the start of the year, concentrating the shock in marginal volumes. The adjustment will land in earnest by 2027, when the Middle East shock and China's export restrictions combine to drive prices up 78%. For a more detailed assessment, see CRU’s Sulphuric Acid Market Outlook.
On costs, less competitive unit prices and higher consumption will leave the region uncompetitive on a per-ton-of-ore basis, with a gap of close to 20% in 2028. Faster growth in global prices than in Chilean and Peruvian prices between 2025 and 2026 allows for some respite before Chile's sharp price growth in 2027 restores the earlier trend. On a per-ton-of-copper basis, costs in Chile and Peru remain above the global average throughout. The gap narrows in 2026 but widens materially thereafter, reaching 95% by 2028 – a level that calls the competitiveness of regional SXEW operations into question.
Major operations are already set to close their SXEW lines between 2030 and 2032, Chuquicamata and Centinela among them, and lower grades and recoveries from ageing deposits compound the cost pressure. Taken together with permitting constraints, this raises a broader question over the future of the processing route in the region – one that rests on emerging technologies, sulphide leaching foremost among them.
Drawing on the analysis of these three drivers, Chile and Peru retain an edge on consumption and productivity in 2026. However, that edge is narrowing as geological constraints take hold, and the unit price disadvantage is harder to address, with both countries sitting above other key markets. Facing the future cost challenge will require operations to adopt new technologies or process optimisation to offset current consumption trends.
Chile and Peru remain competitive today, with the current geopolitical tensions, but retaining that position is far from assured – particularly at a point when more metal is needed, and committed production in both countries is expected to remain flat over the forecast period. That raises the question of whether the region can meet the challenge and remain attractive enough to attract new capital. Cash Cost, ex-royalties, ex-works, will be a key metric by which opportunities are judged, with underlying consumption and unit price dynamics that support a competitive analysis at a more granular assessment underpinned by CRU's Copper Mine Asset Platform services.
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